US tax deal lifts global stocks

The Pak Banker - - International3 -

LONDON: Global eq­ui­ties ad­vanced on Tues­day af­ter a com­pro­mise deal to ex­tend ex­pir­ing U.S. tax cuts, though the euro zone's debt cri­sis and spec­u­la­tion over a pos­si­ble in­ter­est rate rise in China kept them in check. The euro rose on op­ti­mism that Ir­ish law­mak­ers will pass its tough­est ever bud­get later in the day. The sin­gle cur­rency re­mained vul­ner­a­ble, how­ever, with Euro­pean pol­i­cy­mak­ers dither­ing over how to tackle the re­gion's debt prob­lem.

Cop­per prices gained, sup­ported by Chi­nese buy­ing and a firmer euro, while un­cer­tain­ties over mon­e­tary pol­icy in Chi­nathe world's sec­ond largest oil con­sumer-weighed on crude prices.

U.S. Pres­i­dent Barack Obama un­veiled a deal late on Mon­day to re­new tax cuts not just for the mid­dle class but for also wealth­ier Amer­i­cans, as Repub­li­cans wanted.

The an­nounce­ment was wel­comed by the mar­kets, with U.S. stock in­dex fu­tures trad­ing 0.2 to 0.3 per­cent higher and global stocks mea­sured by MSCI All-Coun­try World In­dex adding 0.3 per­cent. "The mar­ket is ben­e­fit­ing from the com­pro­mise in the U.S. on the ex­ten­sion of the Bush tax cuts and to a lesser ex­tent from the prob­a­ble vot­ing (through) of the Ir­ish (bud­get)," said Philippe Gi­jsels, head of re­search at BNP Paribas For­tis Global Mar­kets.

Europe's FTSEurofirst 300 (.FTEU3) in­dex put on 0.2 per­cent and shares in euro zone pe­riph­eral economies also rose, while bor­row­ing costs in those coun­tries held steady.

The Ir­ish bench­mark (.ISEQ) gained 1 per­cent, as Prime Min­is­ter Brian Cowen is ex­pected to get his fis­cal plan through par­lia­ment and avert the risk of a snap elec­tion. Last month, the coun­try ac­cepted an 85 bil­lion euro in­ter­na­tional bailout pack­age.

The euro was up 0.4 per­cent at $1.3356.

"The euro is gain­ing sup­port on op­ti­mism that the Ir­ish bud­get will be passed but I ex­pect any ral­lies to be fleet­ing. Struc­tural weak­nesses in the euro zone re­main in place," said Lee Hardman, cur­rency an­a­lyst at BTM-UFJ.

The sin­gle cur­rency re­gion's pol­i­cy­mak­ers have yet to show the fi­nan­cial mar­kets that they can de­ci­sively re­solve its debt prob­lem. Ger­man Chan­cel­lor An­gela Merkel, speak­ing in Ber­lin, re­buffed calls for a big­ger fi­nan­cial safety net or joint euro bonds. -Ap

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